Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an it

Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory Mar. 10 Purchase Aug. 30 Purchase Dec. 12 Purchase There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar. 50 units $104 50 units @ $112 30 units $116 70 units @ $122 Cost of Merchandise Inventory and Cost of Merchandise Sold Inventory Method Merchandise Inventory Merchandise Sold First-in, first-out (FIFO) Last-in, first-out (LIFO) Weighted average cost

Explanation / Answer

Units available for sale = 200

Ending inventory = 80

Units sold = 200-80 =120

FIFO

Cost of merchandise inventory = (10*116)+(70*122)=9700

Cost of merchandise sold = (50*104)+(50*112)+(20*116)=13120

LIFO

Cost of merchandise inventory = (50*104)+(30*112)=8560

Cost of merchandise sold = (70*122)+(30*116)+(20*112) = 14260

Weighted average cost

Average cost = ((50*104)+(50*112)+(30*116)+(70*122))/200= 114.10

Cost of merchandise inventory = 80*114.10 = 9128

Cost of merchandise sold = 120*114.10= 13692

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